Contractual allocation of service tax liability bars reimbursement where the contractor accepted prevailing tax risk.

A cargo handling contract required the contractor to comply with applicable laws and bear liabilities arising from performance of the service. Because service tax was already applicable before the agreement was executed, the service provider entered the contract with knowledge of the prevailing tax regime and assumed that contractual risk. The tax burden was therefore part of the contractor's obligations under the agreement, and there was no basis to transfer the entire liability to the other party. The petitioner was not entitled to reimbursement of the service tax claimed.

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Issues: Whether the petitioner was entitled to reimbursement of service tax paid under the cargo handling contract.

Analysis: The contract expressly required the contractor to comply with all applicable laws and bear liabilities arising from the performance of the service. Service tax had already become applicable to cargo handling service before the contract was executed, and the petitioner entered into the agreement with knowledge of the prevailing tax regime. The liability to bear the service tax therefore formed part of the contractual risk assumed by the service provider, and no basis existed to shift the entire tax burden to the opposite party.

Conclusion: The petitioner was not entitled to reimbursement of the service tax claimed.

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